Dali Pharmaceuticalco.,Ltd (SHSE:603963) shareholders will doubtless be very grateful to see the share price up 54% in the last month. But that doesn't change the fact that the returns over the last year have been less than pleasing. The cold reality is that the stock has dropped 30% in one year, under-performing the market.

On a more encouraging note the company has added CN¥371m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

Dali Pharmaceuticalco.Ltd wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Dali Pharmaceuticalco.Ltd's revenue didn't grow at all in the last year. In fact, it fell 26%. That's not what investors generally want to see. The stock price has languished lately, falling 30% in a year. That seems pretty reasonable given the lack of both profits and revenue growth. It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Dali Pharmaceuticalco.Ltd's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that Dali Pharmaceuticalco.Ltd shareholders are down 30% for the year. Unfortunately, that's worse than the broader market decline of 11%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.9% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Dali Pharmaceuticalco.Ltd better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Dali Pharmaceuticalco.Ltd you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.